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Is PIMIX a Strong Bond Fund Right Now?

There are plenty of choices in the Diversified Bonds category, but where should you start your research? Well, one fund that might be worth investigating is PIMCO Income Institutional (PIMIX). PIMIX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

PIMIX is one of many Diversified Bonds funds to choose from. Diversified Bonds funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. Usually, these funds will have a good amount of exposure to government debt, in addition to modest holdings in the corporate bond market.

History of Fund/Manager

PIMIX is a part of the PIMCO Funds family of funds, a company based out of Newport Beach, CA. PIMCO Income Institutional made its debut in April of 2007, and since then, PIMIX has accumulated about $81.93 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.

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Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 3.3%, and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 1.12%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 13.09%, the standard deviation of PIMIX over the past three years is 6.14%. Over the past 5 years, the standard deviation of the fund is 6.48% compared to the category average of 14.28%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.45, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PIMIX has a positive alpha of 2.03, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, PIMIX has 68.12% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AA, and focuses on high quality securities.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PIMIX is a no load fund. It has an expense ratio of 0.50% compared to the category average of 0.96%. Looking at the fund from a cost perspective, PIMIX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, PIMCO Income Institutional ( PIMIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, PIMCO Income Institutional ( PIMIX ) looks like a great potential choice for investors right now.

This could just be the start of your research on PIMIXin the Diversified Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.

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